One week after a devastating militant attack near the mountain resort of Pahalgam in Indian-administered Kashmir killed 26 people, the town wears a look of quiet desolation, although tourists have begun trickling back in small numbers.

The main high street, abandoned by visitors last week – with shops shuttered and hotels completely emptied out – is seeing fleeting signs of life again.

Last Tuesday, militants opened fire on people, mostly tourists, who were visiting Baisaran, a mountain-top meadow three miles (5 km) from Pahalgam, often described as the “Switzerland of India”.

The attack was one of the deadliest in recent years, devastating the lives of many families and sparking widespread anger in India.

In the days since, tensions between India and Pakistan, which both claim Kashmir in full but administer it only in part, have significantly risen, with each side announcing retaliatory measures against the other.

There is now growing speculation about whether there will be a military response from Delhi.

While violence has often broken out in the region, with militants targeting security forces and civilians since an insurgency broke out in 1989, the brazen killing of tourists has been rare and has shocked local businesses and tourists alike.

Tourism is a mainstay of the economy in places like Pahalgam and there’s now fear that many livelihoods might be irrevocably hit.

At a “selfie point” outside town, overlooking lush meadows and a rushing river, Akshay Solanki, a tourist from Mumbai, said there was “panic” among his group of travellers on the day of the attack. But they had decided to continue with their journey because flights back home had become unaffordable.

Other tourists said constant reassurances from the locals and security forces had given them a sense of comfort. A driver who had brought visitors from the capital, Srinagar, told BBC Hindi that he was pleading with those visiting not to “distance” themselves from Kashmir.

After a washout three days, shawl-seller Rafi Ahmed said he’d managed to sell just a few pieces and feared for his livelihood in the long run if tourists stopped coming.

Among those exhorting tourists to come to Pahalgam was Bollywood actor Atul Kulkarni, who visited the town days after the attack. He told BBC Hindi, if the message from the militants was “don’t come here, we should respond by coming in even larger numbers”.

“Don’t cancel bookings, cancel your other plans and come here,” Kulkarni said.

But uncertainty and apprehension loom large in Pahalgam and it could take several years before a sense of normalcy is restored, local business owners and residents told the BBC.

Indian authorities have launched combing operations in the region, detaining hundreds of people and destroying homes belonging to alleged militants.

India and Pakistan have also reportedly exchanged small arms fire across the border.

The escalation in tensions is keeping tourists and business owners on tenterhooks.

Indian authorities have often claimed Kashmir witnessed a period of relative peace after Prime Minister Narendra Modi’s government revoked its autonomous status in 2019. Ahead of India’s general elections in 2024, Modi hailed the “freedom” that had come to the region, saying Kashmir was touching new heights of development because it was breathing freely.

Top leaders pointed to high tourism numbers – some 23 million last year and millions more in the years before – as proof of a big boom after years of unquiet. But last week’s attacks have, yet again, shattered any idea of lasting peace in the restive valley.

“This [attack] is a blot on us…How we wipe it off is a long-term concern,” Rafi Ahmed Meer, a politician from Pahalgam told BBC Hindi, urging tourists to remember that it was local Kashmiris who rushed to help after the attacks, even picking up bodies.

The cancellation rate for trips planned from cities like Pune, Mumbai and Bengaluru are very high, Abhishek Sansare, a Mumbai-based tour operator told the BBC. A group of prominent tour operators said in a press conference that some 80-90% of all bookings had been cancelled.

“After the attack, there’s a sense that a war is looming. So tourists are confused about what to do,” said Sansare. “Some of those who’ve already made advance bookings are going ahead with their plans. I’m also going there on the 2nd of next month.”

The attack on tourists is also likely to weigh on Kashmir in other ways. The inauguration of the world’s highest single-arch rail bridge, set to connect the Kashmir valley with the rest of India was slated to happen this month after several delays.

The timeline for the opening of this showpiece project now “looks uncertain”, a source told the BBC.

The region was just beginning to attract fledgling business investments, but those too could dry up if hostilities go up.

“People who were investing in logistics and other sectors will now think twice because of the security environment. Until they regain some confidence, I don’t foresee investments coming to Kashmir immediately,” said Ubair Shah, who owns one of Kashmir’s largest cold storage facilities for fruits in Pulwama district in south Kashmir.

As the region continues to boil over, local leaders have expressed deep anguish to the families who lost their loved ones.

In an impassioned speech in the Jammu and Kashmir assembly on Monday, the state’s chief minister and tourism minister Omar Abdullah paid tributes to the victims by reading out names of all the 26 people.

He said people from every part of the country had come under attack, and while they’d come to Kashmir at his invitation he could not ensure their safe return.

“I had no words to apologise to them. What could I say to the children who saw their father drenched in blood? To the widow of the navy officer who was married barely a few days ago?

“Some people told me they’d come to Kashmir for the first time, but will have to pay for their holiday life long,” he said, adding that the attack had “hollowed out” Kashmir.